In a major judicial setback for federal enforcement agencies, the Delhi High Court has quashed criminal cases registered by the Delhi Police and the Enforcement Directorate (ED) against independent news portal NewsClick and its founder-editor Prabir Purkayastha. Delivering a sharp, definitive ruling in the high-profile foreign funding dispute, the court termed the continuation of the investigation a “gross abuse of the process of law.” The bench established that the state’s actions operated as a direct, arbitrary attack on impartial journalism.
The landmark judgment alters active legal jurisprudence, reinforcing that money laundering files cannot survive once the underlying predicate offense is judicially struck down.
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The 2018 Foreign Direct Investment Origin
The legal battle stems from a First Information Report (FIR) originally registered in August 2020 by the Economic Offences Wing (EOW) of the Delhi Police. The complaint alleged that NewsClick’s parent company, PPK Newsclick Studio Pvt. Ltd., had received ₹9.59 crore in Foreign Direct Investment (FDI) from a United States-based entity, Worldwide Media Holdings LLC, during the 2018–19 fiscal year.
The EOW asserted that the transaction deliberately overvalued company shares to bypass a prescriptive 26% regulatory FDI cap assigned to digital media platforms. Investigators further claimed that the portal subsequently siphoned off nearly 45% of the incoming capital under the guise of regular operational overheads, including staff salaries, rent, and third-party consultancy fees. Following the police registration, the ED initiated a parallel money laundering probe under the Prevention of Money Laundering Act (PMLA), treating the EOW file as its foundational predicate offense.
No FDI Caps and Legitimate Share Valuation
Justice Neena Bansal Krishna dismantled the prosecution’s financial arguments point by point. Reviewing historical policy timelines, the court noted that at the time NewsClick secured the international investment in 2018, there was absolutely no cap or structural restriction restricting FDI inside online digital print media portals.
The bench highlighted that the news outlet had actively written to the Ministry of Information and Broadcasting in December 2017 seeking a definitive policy clarification. The ministry responded officially on January 5, 2018, confirming that online news web portals did not fall under the strict statutory boundaries governing traditional print media. Consequently, the investment agreement was entirely lawful.
Furthermore, the High Court rejected the state’s claims regarding fraudulent share overvaluation. The judgment established that the transaction followed the globally accepted Discounted Cash Flow (DCF) methodology, a standard international practice approved by the Ministry of Finance. Because the share valuation was mutually negotiated and finalized between two private corporate entities, the court ruled that the transaction was a standard economic decision rather than a criminal offense.
The Absence of a Cheated Complainant
Analyzing the essential ingredients of the penal offenses invoked by the Delhi Police, the High Court observed a fundamental structural absence:
- No Aggrieved Party: For a charge of cheating under Section 420 of the Indian Penal Code (IPC) to stand, a specific individual or entity must be defrauded. In this case, the foreign investor never claimed to be deceived or induced into the arrangement.
- Informant Limitations: The initial complaint did not emerge from an affected commercial partner but was initiated merely by an external government informant.
- Operational Reality: The court dismissed allegations of fund siphoning, observing that any operational media platform is naturally required to incur recurring administrative expenses, including staff salaries and real estate rent, to sustain its daily business.
Quashing the ED’s ‘Fishing and Roving’ Exercise
Turning its focus to the Enforcement Directorate’s actions, the High Court held that the agency’s case was built entirely on bald assertions of a criminal conspiracy without supporting evidence. Despite conducting aggressive, multi-day raids in February 2021 and subjecting employees to repeated rounds of custodial interrogation over an eighteen-month window, the ED failed to place a single piece of incriminating evidence on record.
The court characterized the long-running probe as an unauthorized fishing and roving exercise into the financial affairs of the petitioners without the existence of an underlying crime. Relying on settled Supreme Court guidelines, Justice Krishna ruled that because the EOW’s predicate FIR was legally invalid and quashed, the consequential money laundering proceedings could not survive independently. While separate legal challenges involving Prabir Purkayastha—including an independent case under the Unlawful Activities Prevention Act (UAPA)—remain pending, the High Court’s decisive ruling permanently extinguishes the complex financial fraud and PMLA proceedings against the media house.
